How does a debit card work?

To be able to decide when to use your credit card and when to use your debit card, you must first understand why, even though they look alike, they are very different things.

Even though both credit cards and debit cards may be accepted at the same stores to buy the same  things, they work in very different ways. 

When you use your credit card to pay for something, the bank is lending you the money till you pay back, but, if you use your debit card, the money comes directly from your checking account. This means, basically, that you ae not borrowing money from the bank and this is a way of staying out of debts. Debiting expenses is like paying for things in cash, but without the need to carry the cash around with you. 

A debit card can also be used to withdraw cash from an ATM if you need to do so. Sometimes what you need can only be paid for in cash, and as an automatic cashier is ususally nearby, your debit card can come in handy when this happens.To use your debit card, you only need to swipe the card in a merchant's card reader ot at the ATM and then enter the personal identification number (PIN) that you received from the bank.

If you have enough money in your account, a pre-authorization hold will be placed on your checking account reducing your account balance by the amount of the transaction. Occasionally this may appear as "pending" in your account movements until the money is transferred from your account to the merchant. 

Sometimes, when you stay at a hotel or rent a car, your debit card may be used as a guarantee in case you need to be charged for more than was expected. If you payed in advance for the room, for example, the hotel may need to be sure they will be able to charge you for any extra cost (such as minibar expenses or anything broken), so they request a debit or credit card. If you use your debit card for this be sure to have more money in your account than you plan on spending, to avoid any truoble when you are charged for these extra expenses.
 

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